We Are All Chumps Now: App Economy Edition

For awhile now, I’ve been arguing against the notion of a STEM shortage, the idea that our labor problems stem in part from a failure to produce enough graduates in Science, Technology, Engineering, and Math fields to meet demand. This idea is, well, just wrong, plainly wrong. I aggregated a lot of the data here, and here’s a great piece from The Atlantic by Michael Teitelbaum making the case. I have been committed to debunking this idea for two major reasons. First, because facts matter, and one of the most dangerous things to us as a society are those ideas that sound good from a narrative point of view but lack factual backing. The idea of the STEM shortage plays into a bunch of our petty prejudices, most powerfully our idea of the future. But the data simply doesn’t back up that notion.

The second reason is because the notion of a STEM shortage plays into a misguided and destructive vision of our economy– a moralizing notion of our labor market where your outcomes are all a matter of choices that you have made. This is the chumps narrative, where people who have suffered in our labor market have done so because they have pursued foolish, “impractical” careers or education. Virginia Postrel has written cogently about this phenomenon in the past, pointing out, among other things, that it isn’t the case that people with supposedly impractical majors systematically underperform the average, and also that they are such a small slice of the labor force that they can’t possibly account for our problems. I’ve pointed out many times before that going to law school went overnight from being the mercenary path for those bent on riches to a pie-in-the-sky, impractical move for dreamers, as soon as the law job market collapsed. The narrative changes to preserve the idea that individuals are responsible for their own joblessness, and in so doing keeps us from pondering systemic change.

Look at the app economy, which was meant to be the hot new ticket into the land of abundance. (See this 2012 piece from The Atlantic for an indicative example of app economy woowoo.) What could better play into our notions of how to get ahead in America in this new age than the app economy? It’s dynamic! It’s innovative! It’s disruptive! Gone are the days of putting on a suit to go work in some stodgy firm. These days, it’s all about being your own boss, building an app with some buddies in your dorm room, and reaping the whirlwind. It’s a Tom Friedman wet dream, an Aspen Ideas Festival panel sprung to life, the validation of every buzzwordy Wired article and Business Insider post you’ve ever read.

Whoops!

As the indispensable Valleywag tells us this morning, people within the app economy are catching on to the fact that it’s not, actually, an industry in which they can achieve long-term economic security, let alone riches. The bottom 47% of developers make less than $100 a month. Studies have shown that the vast majority of revenues goes to a tiny fraction of developers. The numbers are even more stark when it comes to in-app revenue. Less than .01% of all apps will be considered a financial success, according to some estimates. It turns out that, as in so many other things in the American economy, the app industry is a winner-take-all field, a lottery ticket economy where a tiny number make out like bandits and most people can’t get ahead. And as usual, it’s only the biggest firms– Apple, Google, Microsoft– which are getting ahead.

So all the kids who heard the clarion call and rushed out to get CS degrees, or to drop out under the advice of Peter Thiel, and start coding in their basements– are they all chumps? Do they deserve scorn? Do they deserve to be unable to scratch out a living? Of course not. Like so many others, most of them did what their society told them to do to pursue the good life: work hard, go to school, and try to provide value for people so that you can earn a living. They were sold on a social contract that is failing them. No one can be reasonably expected to predict what skills the economy will value five, ten, twenty years in advance. The urge to call out others for what you perceive as their bad choices is destructive in a labor economy where, despite gains in overall unemployment rate, workers still have remarkably little bargaining power, thanks to underemployment, lack of benefits, low pay, and poor hours. Rather than succumbing to our petty insecurities by blaming others for their economic conditions, we need to look at the macroeconomic factors that are hurting our labor markets. We need to recognize that automation and artificial intelligence are pushing us towards a new era of work– one with tremendous potential productivity gains, but also tremendous uncertainty for labor, even educated labor. It’s time to stop calling people chumps and start building the kind of social system that can guarantee basic material security for all of our people, so that we can all share in the staggering gains of efficiency and productivity that technology is bringing about.